Shops in Zimbabwe have bare shelves after panic buying

Shops in Zimbabwe have bare shelves as people, fearing a new round of hyperinflation like the one in the 2000s decade, are panic buying beer, bread, cooking oil, and other essentials.

Pharmacies have run out of medication for diabetic and high blood pressure patients. There are long queues of cars at petrol stations, with drivers hoping to get petrol before the station runs out.

The panic was triggered when Zimbabwe’s “bond note” currency crashed to 2.5 bond notes to the dollar at the end of a week when the government imposed a new 2 percent tax on all electronic transactions. The result all week was protests and panic over the price increases and shortages of goods.

Zimbabwe’s central bank governor John Mangudya blamed himself for the panic on Saturday: “The problem is that we did not explain things. This economy is a sentiment-driven economy so we need to communicate more with the society.”
Mangudya told reporters that people should not be worried and that he expected an improvement in the next 48 hours.

Bond note currently on the path to inflation or hyperinflation

Readers may recall that, in 2016, then-president Robert Mugabe introduced a new currency called the “bond note.” Each bond note would be worth exactly one U.S. dollar. This was necessary because Zimbabwe’s banks were running out of U.S. dollars with which to purchase imports.

In the 1990s, Zimbabwe used to be the breadbasket of southern Africa, growing much more food than the country needed and exporting the rest. Then, in 1999, Robert Mugabe instituted a “land reform” plan just like the one that South Africa and Namibia are planning are now planning, confiscating white-owned farms and giving them to his cronies in the Shona tribe who knew nothing about farming. Within ten years, Zimbabwe was an economic disaster, with mass starvation, a worthless currency, and massive million percent inflation.

By 2009, the Zimbabwe currency was more worthless than toilet paper, and so the U.S. dollar became the official currency. But Mugabe continued with his destructive racist policies, and by December 2016, Zimbabwe was running out of U.S. dollars. So Mugabe introduced the bond note, with each bond note worth $1.00.

This cause large street demonstrations by Zimbabwe’s public because they knew that the bond notes would suffer the same inflation or hyperinflation that Zimbabwe’s original currency did. But Mugabe promised that would not happen since no more than $200 million in bond notes would ever be printed, so hyperinflation was impossible.

During 2017, Zimbabwe’s central bank printed more and more bond notes, and by August 2017, the value of the bond note fell 50 percent compared to the US dollar. The central bank announced that it would print another $300 million in bond notes, bringing the bond note total up to $500 million, or half a billion.